Following last week’s recission of the Cole Memo by Attorney General Jeff Sessions, the Canadian Securities Administrators (CSA), an organization consisting of securities regulators from each of the 10 provinces and 3 territories, is rethinking its policies with respect to Canadian companies with cannabis operations in the United States. In a press release issued Friday evening, the organization suggested that its prior guidance from mid-October, CSA Staff Notice 51-352 (Issuers with U.S. Marijuana-Related Activities) may no longer be the proper framework.
The CSA is considering whether our disclosure-based approach for issuers with U.S. marijuana-related activities remains appropriate in light of the rescission of the Cole Memorandum. Issuers with no U.S. marijuana-related activities and that otherwise operate in compliance with applicable Canadian laws are not the focus.
The prior guidance suggested that issuers with U.S. cannabis operations:
- Describe the nature of the issuer’s involvement in the U.S. marijuana industry and include the disclosures indicated for at least one of the direct, indirect and ancillary industry
involvement types noted in this table.
- Explain that marijuana remains illegal under U.S. federal law and that the approach to enforcement of U.S. federal laws against marijuana is subject to change, and discuss the
resultant risks, including the risk of adverse enforcement action.
- State whether and how the issuer’s U.S. marijuana-related activities are conducted in a manner consistent with any U.S. federal enforcement priorities.
- Given the illegality of marijuana under U.S. federal law, discuss the issuer’s ability to
access both public and private capital and indicate what financing options are / are not available in order to support continuing operations.
It also provided guidance at that time for companies with direct involvement in cultivation or distribution, indirect involvement in those areas and material involvement with ancillary goods or services.
No policy changes have been announced, but CSA suggests that it will be sharing an update in the near-term.
Companies that could be impacted by potential changes in policy from Canadian regulators include:
- Alternate Health (CSE: AHG) (OTC: AHGIF)
- Aphria (TSX: APH) (OTC: APHQF)
- Body & Mind (CSE: BAMM) (OTC: BMMJ)
- CannaRoyalty (CSE: CRZ) (OTC: CNNRF)
- CannTrust (CSE: TRST) (OTC: CNTTF)
- Friday Night (CSE: TGIF) (OTC: TGIFF)
- Future Farm Technologies (CSE: FFT) (OTC: FFRMF)
- Golden Leaf Holdings (CSE: GLH) (OTC: GLDFF)
- High Hampton (CSE: HC) (OTC: HHPHF)
- iAnthus Capital (CSE: IAN) (OTC: ITHUF)
- International Cannabrands (CSE: JUJU) (OTC: GEATF)
- Lifestyle Delivery Systems (CSE: LDS) (OTC: LDSYF)
- Liberty Health Sciences (CSE: LHS) (OTC: LHSIF)
- Maple Leaf Green World (TSXV: MGW) (OTC: MGWFF)
- Marapharm (CSE: MDM) (OTC: MRPHF)
- MPX Bioceutical (CSE: MPX) (OTC: MPXEF)
- NanoSphere Health Sciences (CSE: NSHS) (OTC: NSHPF)
- New Age Farms (CSE: NF) (OTC: NWGFF)
- Nutritional High (CSE: EAT) (OTC: SPLIF)
- Phivida (CSE: VIDA) (OTC: PHVAF)
- Sunniva (CSE: SNN) (OTC: SNNVF)
- Tinley Beverage Company (CSE: TNY) (OTC: QRSRF)
- Vodis Pharma (CSE: VP) (OTC: VDQSF)
- Wildflower Marijuana (CSE: SUN) (OTC: WLDFF)